Glut of repossessed houses could depress prices ‘by up to 25%’

lima

cookie1977 wrote: »

It is good to see this happening to the extent that it is necessary for some borrowers to realise they have no other option then to loose their house but whether the repossessed properties will be A) in good locations to sell or the type of property people want to buy (Apt/House) and C) put back on the market quickly, is another thing altogether. I also saw that...


http://www.independent.ie/business/irish/aib-admits-writing-off-mortgage-debt-for-struggling-homeowners-29361545.html

Honestly, I'm just 'happy' that things are moving instead of being in a stagnant state.

hfallada

Looks like people finally have a reason to start paying their mortgage again. Although how long will take to get through the back log off cases and decide which cases to bring to the courts first.

lima

hfallada wrote: »

Looks like people finally have a reason to start paying their mortgage again. Although how long will take to get through the back log off cases and decide which cases to bring to the courts first.

I'm sure they'll hit the BTL 'investors' first

Then there will be a glut of apartments on the market which will hopefully drive down prices and rent to a realistic value

handlemaster

with the announcement that repossessions grace period is to fall from 12 too 2 months this should speed up the repossessions of the people living for free and not before time

JJJJNR

handlemaster wrote: »

with the announcement that repossessions grace period is to fall from 12 too 2 months this should speed up the repossessions of the people living for free and not before time

I don't get the living for free, the debt still has to be paid, if you miss a months payment do you think it gets written off or something, this statement shows nothing but complete and utter stupidity on your part.

handlemaster

JJJJNR wrote: »

I don't get the living for free, the debt still has to be paid, if you miss a months payment do you think it gets written off or something, this statement shows nothing but complete and utter stupidity on your part.

if you think someone who hasnt paid their mortgage for a number of years is going to care about outstanding debt think again. Whats going to happen to them in Ireland ? Nothing thats want.

hfallada

lima wrote: »

I'm sure they'll hit the BTL 'investors' first

Then there will be a glut of apartments on the market which will hopefully drive down prices and rent to a realistic value

Although its questionable how much it can drive down prices in Dublin. There is a huge amount of language students that are snapping everything up and money isnt really an issue for them.

OMD

Villa05 wrote: »

I suspect too much dithering by the Irish banks, I reckon it may be forced upon them due to people leaving the country to obtain bankruptcy in the UK.

Ulster Bank and NIB will probably be the first out of the blocks, hovering up what cash remains. Irish banks will act when it is too late and this will happen

http://cormaclucey.blogspot.ie/2013/06/normal-0-false-false-false-en-ie-x-none.html

The article is interesting but has one glaring flaw. He wants to ignore the property market from 1997 onward as the market during this time was abnormal. That sounds fair enough at one level but surely that is the point of long term average is that they take into account abnormally high and abnormally low and average them out. Why not ignore the recession of the 80s when we last had mass emigration and mass unemployment? Surely that effected the property market?
In addition by ignoring the 15 years from 1997 on he is ignoring the period of time when we had

• Fastest growth in population in the history of this country
• Greatest number of people at work in the history of this country
• Greatest number of immigrants and lowest number of emigrants in the history of this country
• Longest period of sustained low inflation since the 1960s
• Lowest average mortgage rates for a 15 year period in the history of this country.
• Significant shift in the number of households from 1 to 2 earners

Why simply ignore this period?

lima

hfallada wrote: »

Although its questionable how much it can drive down prices in Dublin. There is a huge amount of language students that are snapping everything up and money isnt really an issue for them.

Do you really think there are enough international students with rich parents to purchase ALL the property in Dublin?

jmayo

JJJJNR wrote: »

I don't get the living for free, the debt still has to be paid, if you miss a months payment do you think it gets written off or something, this statement shows nothing but complete and utter stupidity on your part.

Some people were deliberately not paying their mortgages, all in the hope of the bailout for the little guy.
Hell we had posters on these forums recommending people to wait for the debt writeoffs or shoudl i just call a spade a spade and label it asset retention handouts.

Some people have been living rent or mortgage free of even upto years at this stage.
Now that it might become apparent that there can't be the "bailout for the little guy" that they expected, then I expect them to either dig their heels in or just jump ship leaving their debts behind them.

And i think the mention of free is in reference to the ones living there, not us poor smucks who will have to end up covering their debts.

OMD wrote: »

The article is interesting but has one glaring flaw. He wants to ignore the property market from 1997 onward as the market during this time was abnormal. That sounds fair enough at one level but surely that is the point of long term average is that they take into account abnormally high and abnormally low and average them out. Why not ignore the recession of the 80s when we last had mass emigration and mass unemployment? Surely that effected the property market?
In addition by ignoring the 15 years from 1997 on he is ignoring the period of time when we had

• Fastest growth in population in the history of this country
• Greatest number of people at work in the history of this country
• Greatest number of immigrants and lowest number of emigrants in the history of this country
• Longest period of sustained low inflation since the 1960s
• Lowest average mortgage rates for a 15 year period in the history of this country.
• Significant shift in the number of households from 1 to 2 earners

Why simply ignore this period?

Because it was an anomaly in Irish history and we had one of the biggest property bubbles in history ?????
Even when we had high inflation, low employment numbers, high emigration our property was never dirt cheap in comparison to the massive prices we had during the bubble.
Maybe he could have included prices upto 2001, but that would be it.
After that it was the lunatics running the asylum.

OMD

jmayo wrote: »

Because it was an anomaly in Irish history and we had one of the biggest property bubbles in history ?????
Even when we had high inflation, low employment numbers, high emigration our property was never dirt cheap in comparison to the massive prices we had during the bubble.
Maybe he could have included prices upto 2001, but that would be it.
After that it was the lunatics running the asylum.

But that is the point of taking long term average over 40 years to even out the ups & downs. My point about the low employment etc is that even if we didn't have bubble prices, and we simply had a normal market, prices during this period should have been well above the long term average. Simply using the period 1971 to 1996 and saying that reflects the long term average ignores so much of the changes in our society.

Our country is markedly different now to then 1971-1996. We have a younger, better educated, more mobile workforce. We have much more women in the workplace and the size of the average household has plummeted. In addition people in general want bigger houses. We still have much lower taxes than during the 70s and early 80s. Despite all the job losses, our numbers at work are far ahead of those in the 70s and 80s (both in absolute numbers and in percentage of adult population) and our population is approximately 50% higher. Inflation is much lower than during this period and our mortgage interest rates are much, much, much lower. Why should current house prices reflect house prices during the 70s and 80s, an enormously different period in our countries history?

While I am at it, he says that when house prices drop after a bubble, they go below their long term average then rise again. This means that prices drop below their long term average which includes the bubble period. He says in Ireland, we should ignore the bubble period to decide our long term average but somehow the graph should still apply to our bubble. Why?

StillWaters

300,000 extra women entered the workforce during this period. That, the factors above and the Digitalisation of industry utterly transformed the labour Market. What a nonsense to ignore it.

Villa05

OMD wrote: »

The article is interesting but has one glaring flaw. He wants to ignore the property market from 1997 onward as the market during this time was abnormal. That sounds fair enough at one level but surely that is the point of long term average is that they take into account abnormally high and abnormally low and average them out. Why not ignore the recession of the 80s when we last had mass emigration and mass unemployment? Surely that effected the property market?
In addition by ignoring the 15 years from 1997 on he is ignoring the period of time when we had

• Fastest growth in population in the history of this country
• Greatest number of people at work in the history of this country
• Greatest number of immigrants and lowest number of emigrants in the history of this country
• Longest period of sustained low inflation since the 1960s
• Lowest average mortgage rates for a 15 year period in the history of this country.
• Significant shift in the number of households from 1 to 2 earners

Why simply ignore this period?

All of the above were products of a massive mistake, leaving a massive bill that future generations have to pay, yes, we had all of the above but it was put on the country's credit card.

Yes prices would have increased normally between 97 and 07, but it should have been in line with inflation. There were 2 years in the late 90's where prices increased by nearly 30%. Increases throughout that period were in double digit %. Wages or inflation did not go up by that amount and construction/accommodation inflation distorted the true inflation figure.

The period did not represent normal peaks and troughs of a normal functioning market, but that of a bubble of epic proportions, never replicated in any economy in the world.

The closest any other country has come to creating a bubble like ours was Japan and 30 years on, with more tools at their disposal, they are still trying to recover from it.

The reason Cormac Lucey has left it out, is because it was a period of sheer madness, (yet to be paid for). The long term foreseeable future for this country will be more akin to to 77 to 97. We hopefully will never see 97 to 07 ever again. The bill it has left should help to ensure this.

StillWaters

No, certainly in the late 90s we had sustainable growth, population growth and a shortage of housing. Under those circumstances there is no way housing could have increased only in line with inflation.

Villa05

StillWaters wrote: »

No, certainly in the late 90s we had sustainable growth, population growth and a shortage of housing. Under those circumstances there is no way housing could have increased only in line with inflation.

Yes we had sustainable growth in the late 90's but unfortunately we blew it on property

30% house price inflation would have alarm bells ringing all over the place. Shortage of housing is/was a temporary issue even in Dublin.

Villa05

What impact will these horrendous losses have on mortgage interest rates in the future?

54,135 mortgages in serious danger of repossession. Of these 26,000 are over 2 years in arrears (11.9% increase on the previous quarter).

Nearly half of all restructured mortgages are back in arrears.

A quick search of Daft (excluding sites for sale) shows 43,223 properties for sale. Repossessing from those in serious danger would more than double the stock for sale.

Outstanding:
Total residential mortgage loan accounts outstanding - at end of Q1 2013 774,109 (Q4 2012 778,375) [Change in period: -4,266 or -0.5%]

Arrears:
Total mortgage arrears cases outstanding - at end of Q1 2013 which are:
- In arrears up to 90 days 46,564 (Q4 2012 46,875) [Change in period: -311 or -0.7%]
- In arrears 91 to 180 days 18,205 (Q4 2012 18,521) [Change in period: -316 or -1.7%]
- In arrears over 180 days 77,349 (Q4 2012 73,828) [Change in period: +3,521 or +4.8%]
of which
- In arrears 181 to 360 days 23,214 (Q4 2012 23,443) [Change in period: -229 or -1.0%]
- In arrears 261 to 720 days 28,195 (Q4 2012 27,212) [Change in period: +983 or +3.6%]
- In arrears over 720 days 25,940 (Q4 2012 23,173) [Change in period: +2,767 or +11.9%]

Restructured Mortgages:
Total outstanding classified as restructured - at end of Q1 2013 79,689 (Q4 2012 78,279) [Change in period: +1,410 or +1.8%]
- of which are not in arrears 42,235 or 53.0% (Q4 2012 41,474 or 53.0%) [Change in period: +761 or +0%]

http://www.centralbank.ie/polstats/stats/mortgagearrears/Documents/2013q1_ie_mortgage_arrears_statistics.pdf

jetfiremuck

Oh and dont forget the reduction in repo time the banks have now. Itll be gloves off now.

khards

Best to repossess them, clear the stock and start afresh. In 10 years time when prices have settled down, people will look back and wonder what all the fuss was about.

The world does not stop when you are moved on from a house that you cannot afford. You will end up renting one of those new builds that are plentiful in certain areas.

At the end of they if you can't afford to live there, there are many who can so to all those defaulters 'jog on' and make space for others.

Villa05

khards wrote: »

'jog on' and make space for others.

Very immature and unhelpful.

khards

Villa05 wrote: »

Very immature and unhelpful.

Fair enough I am taking the pee a bit, but some people have such a sense of self entitlement.

Oooooh it's all the banks fault they should not have lent me the money xyz..
Oooooh think of the families ...
Oooooh the sky faries wouldn't like you chucking people out.

As it can be seen holding off repossessing isn't helping anyone and if we continue down this route the will be over 100,000 debt slaves and Ireland will need bailing out again in 12 months.

It is time to cut the losses people! Call it a day and hand back the keys and start you new life adventure.

cookie1977

We don't have "hand back the keys" in ireland. You don't get to start your new life adventure until your debts are paid.

Villa05

khards wrote: »

Fair enough I am taking the pee a bit, but some people have such a sense of self entitlement.

Oooooh it's all the banks fault they should not have lent me the money xyz..
Oooooh think of the families ...
Oooooh the sky faries wouldn't like you chucking people out.

As it can be seen holding off repossessing isn't helping anyone and if we continue down this route the will be over 100,000 debt slaves and Ireland will need bailing out again in 12 months.

It is time to cut the losses people! Call it a day and hand back the keys and start you new life adventure.

I think most people are aware of their responsibilities and are willing to face reality. Solutions where the pain is shared between both the borrower and the lender will be accepted by the vast majority.

The "noise" you are hearing is driven by people in the media (you know who I'm talking about) trying to rally the public to rebel so that the well heeled can benefit from any deal offered to the general public.

khards

No, you don't have to do anything! You could just sit there until someone forces your hand or you are too old to do anything about the situation you find yourself in.

Bankruptcy is good option if you find yourself hopelessly insolvent. Many of those who have decided not to pay their mortgage are so far in negative equity it does not make sense for them to commit themselves to a life time of debt slavery when they could just go bankrupt and free themselves.

Most of this mess is down to unjustified fear.
1, Fear of missing the boat - look where that ended up.
2, Fear of renting / the unknown - that will yet you into a similar place.

time for these people to man up and face up to the reality of being insolvent. For most of these defaulters life can't get much worse.

khards

Villa05 wrote: »

I think most people are aware of their responsibilities and are willing to face reality. Solutions where the pain is shared between both the borrower and the lender will be accepted by the vast majority.
.

The solutions are not going to be shared by the banks because they are the ones running the country.
Banks are already losing money hand over fist, the only way out of this mess is mass repossession followed by bankruptcy.

Purge the bad debt from via bankruptcy and we can all start from scratch. There is no point people jumping up and down and shouting as you cannot hold back the laws of economics forever.
In most of these cases the people living in the properties are deep underwater so have nothing lo loose any way, that is why the arrears are getting worse. The defaulters know there is no point in paying and they don't want to.

StillWaters

There is not going to be mass repossessions. That's just redtop headline stuff.
Banks will cherrypick properties and owners to take action on, and then dripfeed to Market.

Do not expect this to have any significant impact on the property Market.

who_ru

StillWaters wrote: »

There is not going to be mass repossessions. That's just redtop headline stuff.
Banks will cherrypick properties and owners to take action on, and then dripfeed to Market.

Do not expect this to have any significant impact on the property Market.

I agree with you - there will probably be a few high profile court cases involving people with multiple gaffs that will generate enough headlines of shock, horror, exaggerated moral outrage against the repossession culture that will be done in conjuction with other VIs to see the entire process ground to a halt.

not one of the Govt/Central bank/nationalised banks want to deal with this problem as it requires balls and leadership, simply not part of irish life i'm afraid.

there won't be mass repos - the strategic defaulters will win out. those still just about servicing their mortgage will be the suckers in this sorry mess.

Galego

Did massive repossessions do an favours to Spanish banks? Short answer: no.
Now Spanish banks have ended up with tons of unwanted houses which they can't get rid of.

Irish banks would surely only be interested in repossessing those properties with some equity yet in them.

What's the point for them in repossessing apartments in Leitrim? The cost of repossession (and holding that stock) is surely higher than what they could ever get for it in the current market.

handlemaster

Galego wrote: »

Did massive repossessions do an favours to Spanish banks? Short answer: no.
Now Spanish banks have ended up with tons of unwanted houses which they can't get rid of.

Irish banks would surely only be interested in repossessing those properties with some equity yet in them.

What's the point for them in repossessing apartments in Leitrim? The cost of repossession (and holding that stock) is surely higher than what they could ever get for it in the current market.

I think the idea would be to get somthing for it as oppossed to leaving it there and gettting no return. All these properties will sell but at what price is the question

lima

StillWaters wrote: »

There is not going to be mass repossessions. That's just redtop headline stuff.
Banks will cherrypick properties and owners to take action on, and then dripfeed to Market.

Do not expect this to have any significant impact on the property Market.

you wish.. there are so many properties eligible to be repo'd and the fact it will now take 2 months for the banks to act means there will be more stock on the market, how wouldn't there be!

khards

StillWaters wrote: »

Do not expect this to have any significant impact on the property Market.

Haahhhaaahahhah hahahahhahahha. You are joking right?

Over 20,000 hoplessely insolvent defaulters properties repossessed and dumped onto a market currently consisting of 48,977 properties for sale.

Yes, prices will go down again, but look on the bright side, once this stock has been cleared prices will stabilize to what ever the banks are willing to lend to the average punter.

It should take around 5 years to clear all of the new stock.